Argentine peso takes fresh hit amid uncertainty over expiring Lebacs

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A person demonstrates against the rise of public services fares and the government's negotiations with the International Monetary Fund (IMF), in Buenos Aires, on May 14, 2018. | Eitan Abramovich-AFP

Argentina’s peso plummeted to a new low Monday despite government attempts to curb losses in recent weeks by hiking interest rates and shedding billions in foreign reserves.

Signs that further measures are needed from President Mauricio Macri’s center-right government came as the peso fell sharply on opening Monday and closed down 6.23 percent, trading at 25.52 against the dollar.

At this rate, an informal International Monetary Fund board meeting scheduled for Friday to discuss a financial aid package can’t come soon enough, after Macri last week began negotiations for a loan to stem the currency run.

An IMF spokesman announced the meeting on Monday even as the peso tumbled.

“This will be an informal meeting as part of our usual process of briefing the Board on negotiations for high access IMF programmes,” Gerry Rice said in a statement.

Argentine media reports say the government needs at least US $30 billion from the IMF, with extra support from the World Bank and the Inter-American Development Bank.

As US interest rates rise, investors in recent weeks have been fleeing Argentina, driving up demand for US dollars, and driving the peso down.

Monday’s drop means the currency has devalued by nearly 20 percent in the last six weeks, despite efforts by the central bank to prop up its value, burning through more than US$8 billion in reserves and hiking the benchmark interest rate to 40 percent.